News Corp. pledged $2.5 mln to DJ watchdog's group

By Jim Finkle and Kenneth Li

BOSTON/NEW YORK (Reuters) - Dow Jones & Co DJ.N said on Thursday it did not know that one of the people named to protect its editorial independence after it becomes part of News Corp NWSa.N runs a foundation that received a donation pledge of $2.5 million (1.2 million pounds) from News Corp.

Rupert Murdoch's global media conglomerate selected Massachusetts Institute of Technology Professor Nicholas Negroponte to be part of the five-member special committee that will oversee the editorial independence of Dow Jones's news operations including the Wall Street Journal.

Creation of the committee and agreement on who would be on it was part of News Corp's $5.6 billion deal to buy Dow Jones.

Asked if the donation compromised Negroponte's independence as a member of a group designed to safeguard Dow Jones' editorial integrity, Dow Jones spokeswoman Linda Dunbar said: "We are confident of the capability of the individuals to make independent decisions."

In an e-mail interview with Reuters in May, Negroponte described Murdoch as a personal friend and a key backer of the One Laptop per Child (OLPC) foundation that makes inexpensive laptop computers for poor children.

News Corp is one of 11 parties, including Google (GOOG.O) and Advanced Micro Devices (AMD.N), that each pledged to give $2.5 million to OLPC, Negroponte said in May.

"If in fact Nicholas' foundation is receiving money from News Corp, that creates the perception and, quite possibly, the reality of a conflict," said Louis Ureneck, chairman of the journalism department at Boston University.

"Is a person truly independent if a decision he makes puts at risk a significant grant to his foundation? It strikes me that there is a conflict," Ureneck said.

Bob Steele, a journalism values scholar at the Poynter Institute, said it would be challenging for Negroponte to balance his loyalty to Murdoch as a friend and business associate with his responsibilities as a committee member.

"But it is possible," said Steele.

Poynter is a school for professional journalists in St. Petersburg, Florida.

It was not clear if members of Dow Jones's controlling Bancroft family, who negotiated and agreed upon the structure of the independent committee, were aware of the donation.

A Bancroft family representative declined comment. Some members of the family had opposed the deal out of fear that Murdoch would interfere with Dow Jones's news operations to further his business interests.

Another member of the independent committee, Thomas Bray, has ties to Dow Jones. Bray, former Detroit News editorial page editor, has written for Dow Jones's OpinionJournal.com. The Wall Street Journal reported that he would serve as chairman of the committee.

A News Corp spokesman said the company saw no conflicts of interest in Negroponte's appointment.